The Fee for Service Approach and Possible Reforms to Help Bring
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“Fee for Service” is the primary approach to healthcare in the United States. Under the fee for services approach, doctors and care providers get paid for each procedure or service they provide to patients. There are over 11,000 different Current Procedural Terminology (CPT) codes in use in the United States, for everything from aspirin to open heart surgery. To get paid, healthcare providers must submit a payment request to the insurance company listing every code for every treatment, procedure or medication.
It is this approach, fee for service, which has resulted in the high degree of bureaucratization of U.S. healthcare. People tend to blame the insurance companies for creating a system which greatly increases the documentation and paperwork necessary to pay for healthcare. However the bureaucracy is because of the fee for service approach.
The vast majority of Americans receive healthcare with a fee for service approach, with insurance companies or plan administrators responsible for payment to care providers. As noted, a $5,000 is not enough to pay the premiums of most current fee for service-based insurance plans. Coverage for All includes reforms which WOULD allow insurers to configure and offer lower-priced insurance coverage. Insurers could offer plans with explicit rationing:
With these options, traditional fee for service insurance plans will have tools to reduce the cost of healthcare and so the cost of the premiums. Yes, these plans will offer fewer services and a lower level of care, and not all of the latest treatments. However they will make healthcare insurance more affordable, offering more options to people who do not have an employer or union helping to pay for their insurance. Coverage for All doesn’t provide perfect coverage, but it will provide universal coverage.
It is this approach, fee for service, which has resulted in the high degree of bureaucratization of U.S. healthcare. People tend to blame the insurance companies for creating a system which greatly increases the documentation and paperwork necessary to pay for healthcare. However the bureaucracy is because of the fee for service approach.
The vast majority of Americans receive healthcare with a fee for service approach, with insurance companies or plan administrators responsible for payment to care providers. As noted, a $5,000 is not enough to pay the premiums of most current fee for service-based insurance plans. Coverage for All includes reforms which WOULD allow insurers to configure and offer lower-priced insurance coverage. Insurers could offer plans with explicit rationing:
- Annual limits on costs. Plans with a cap on the amount of money that can be spent annually on the care of any one person in the plan.
- Limitations on liability claims. Plans which require the participants to agree to alternative adjudication of negligence and malpractice claims.
- Limit access to drugs and procedures based on their cost. Plans that allow insurers not cover new treatments and drugs because of their cost.
- Group Negotiations. Allow insurers, HMOs and other payers to form a buying collectives to negotiate with large providers and pharma companies.
With these options, traditional fee for service insurance plans will have tools to reduce the cost of healthcare and so the cost of the premiums. Yes, these plans will offer fewer services and a lower level of care, and not all of the latest treatments. However they will make healthcare insurance more affordable, offering more options to people who do not have an employer or union helping to pay for their insurance. Coverage for All doesn’t provide perfect coverage, but it will provide universal coverage.